Certified Government Financial Manager (CGFM) Practice Exam 2025 - Free CGFM Practice Questions and Study Guide

Derived tax revenue transactions refer to taxes collected from transactions or activities that generate the revenue. Sales tax, which is imposed on the exchange of goods and services, is a prime example of this type of tax revenue. When a consumer purchases an item, a certain percentage of that sale is collected as sales tax. This tax revenue is directly derived from the economic activity (the exchange transaction) taking place at that moment.

In contrast, property tax recognized on the levy date is linked to real estate ownership rather than a transaction. Federal grants based on eligibility refer to funds provided by the federal government contingent on meeting certain criteria, rather than derived from specific revenue-generating activities. Lastly, shared revenues among government entities deal with the distribution of tax revenues collected by one entity to another, without being directly tied to a specific transaction. Therefore, the definition of derived tax revenue transactions fits best with sales tax, as it is directly linked to ongoing economic exchanges.